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Oil and Gas Roundup — July 27

July 27, 2017
TOPICS: In the news, OIPA
Oklahoma Panhandle soon will be home to nation’s largest wind farm

Public Service Co. of Oklahoma and a sister electric utility will team up on a $4.5 billion project to take renewable energy from the nation's largest wind farm in the Oklahoma Panhandle to their customers in four states, the utilities announced Wednesday.

The Wind Catcher Energy Connection project will involve 800 GE wind turbines at an under-construction Invenergy wind farm straddling Cimarron and Texas counties in the Oklahoma Panhandle. A dedicated, 765-kilovolt tie line will take the renewable energy about 350 miles to a substation in north Tulsa for exclusive use by PSO and Southwestern Electric Power Co., or SWEPCO.

The project is expected to be finished in late 2020. The investment will be split between $2.9 billion for the wind generation and $1.6 billion for the generation tie line.

PSO will get 600 megawatts of the Wind Catcher facility, while SWEPCO will get the other 1,400 megawatts of wind capacity. With the additional wind capacity, renewable energy will make up 40 percent of PSO's generating capacity by 2021. The utility already has 1,137 megawatts of wind — 22 percent of total capacity — through various power-purchase agreements.

PSO said the Wind Catcher project is expected to provide customers net savings of more than $2 billion over its useful life. Savings include reduced energy costs and tax benefits from federal production tax credits. The dedicated tie line will ensure delivery of the energy without congestion costs associated with existing power lines in the region.

Read Paul Monies’ story at NewsOK.

Trump formally establishes infrastructure council, with focus on energy

The Trump Administration has formally established the Advisory Council on Infrastructure, which will make recommendations on necessary investments, look for ways to speed approval processes and develop new funding mechanisms.

A major focus of the council will be on energy, including pipelines, gas infrastructure and electric transmission.

The council's operations are already being challenged. The Hill reports that the non profit group Food & Water Watch filed a lawsuit claiming the council has already been meeting — a violation of public access laws.

Read more at Utility Dive.

Oil nears two-month high as EIA reports a drop in U.S. crude supplies for fourth week in a row

Oil prices finished at their highest level in about two months Wednesday, buoyed by data showing a fourth consecutive week of declines in U.S. crude inventories.

Prices had already posted gains in the last two sessions, with Tuesday’s move marking the biggest single-session rise of the year so far.

Some members of the Organization of the Petroleum Exporting Countries have promised to cut back exports, traders are showing concern about Venezuelan oil supplies ahead of a national vote Sunday, and there are signs of a possible slowdown in U.S. crude production in the wake of reduced spending plans for some oilfield services companies.

On the New York Mercantile Exchange Wednesday, September West Texas Intermediate crude rose 86 cents, or 1.8%, to settle at $48.75 a barrel—the highest finish for a most-active contract since May 30, according to FactSet. September Brent crude on London’s ICE Futures exchange rose 77 cents, or 1.5%, to $50.97, with prices also logging the lowest finish since late May.

Read more at MarketWatch.

Why record U.S. oil exports are poised for even more growth

U.S. refineries are producing more fuel than ever as they seek to meet rising demand - from overseas, rather than the drivers on nearby roadways.

Last year, the U.S. became the world's top net exporter of fuel, an outgrowth of booming domestic production since the shale oil revolution started in 2010. That's a fundamental shift from the traditional U.S. role in global markets as a top importer and consumer.

Net exports are on track to hit another record in 2017, making foreign fuel markets increasingly important for the future growth prospects and profit margins of U.S. refiners.

Shale oil producers have provided refiners with abundant and cheap domestic crude supplies, giving them the raw material they need to produce internationally competitive fuel.

The nation set a record in 2016 by sending a net 2.5 million barrels per day (bpd) of petroleum products to foreign markets. That compares to net fuel imports of 2.3 million just a decade ago, according to U.S. government data.

Read more at Reuters.

While oil patch bleeds, gas drillers race to unleash wells

Oil prices have been lousy for so long that U.S. producers are hoarding unfinished wells rather than pumping crude out of them. In the natural gas patch, just the opposite is happening.

While the energy slump has idled lots of wells for both commodities, their economics have diverged. Oil remains at half its price in 2014, leading to a record backlog of drilled-but-uncompleted wells spread across shale formations where fracking brought on a surge in crude production. Meanwhile, gas futures are almost double last year’s low, and the so-called fracklog of wells in the Marcellus gas fields of Pennsylvania and West Virginia is shrinking as drillers there unleash supplies to take advantage of higher prices.

By the end of June, the fracklog in the Marcellus was the smallest in the three and a half years since government data has been collected. The drop portends a production boom that could imperil bullish gas bets, which jumped to a three-year high in May on speculation that a hot summer, new pipeline capacity and rising exports of the fuel would boost demand.

Gas explorers are “putting a down payment on a bull market that companies hope is coming,” said John Kilduff, a partner at the commodities hedge fund Again Capital LLC. They’re “taking the view that prices are going to rebound.”

Read more at Bloomberg.

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